The 8 Key Steps to Homeownership
Step 7 - Moving from an Accepted Offer to a Closed Sale > What Is Escrow?
What is Escrow?
The purpose of escrow is to ensure that the concerns of the Buyer, Seller and Lender will all be met. Escrow is an arrangement in which money and/or documents are held by a neutral third party on behalf of the Buyer and Seller. The money and documents are then transferred or distributed by the escrow agent according the purchase and sale agreement and instructions from the Buyer’s Lender. Escrow is the neutral 3rd party and therefore can not give legal advice to either side.
The escrow agent prepares and explains the escrow instructions and arranges for execution, recording and delivery of all necessary documents. He or she collects the funds necessary to close and prepares settlement or closing statements. When all conditions have been met and your lender has released your loan funds, escrow will send the deed down to the courthouse to be recorded. Once the deed is recorded the sale is considered closed and you are the new owner!